Cook County to have apartment shortage through 2020
(from Chicago Tribune – November 15, 2011)
by Mary Ellen Podmolik – November 15, 2011
Tough economic times are forcing more Cook County residents to search for affordable apartments, but the dwindling supply is only expected to get worse. The number of renters who needed affordable housing in 2009 totaled almost 483,000, yet less than 303,000 rental units were considered affordable, meaning nearly two in five renters who needed those units didn’t find it.
Looking forward, by 2020 another 44,000 affordable apartments will be needed because of various demographic and economic changes shaping the market, according to a report that DePaul University’s Institute for Housing Studies is expected to release Tuesday.
DePaul’s report, based on the most recent census data and foreclosure and rent statistics, paints a potentially dire situation for low- and moderate-income renters, and not just because foreclosures have wreaked havoc in some neighborhoods. Rather, the bigger issue is increasing rents at a time when household incomes are decreasing.
In 2009, renters needed to make about $33,000 annually to afford the median monthly rent of $823 in Cook County for a two-bedroom apartment while spending no more than 30 percent of their incomes on housing. The median income of renters in 2009 was $31,367. About 40 percent of Cook County households are renters.
“The access to housing that people can afford at 30 percent of their income, there’s not enough there,” said Geoff Smith, the institute’s executive director. “These households are rent-burdened. It reduces their economic stability, their economic opportunity. “That should be a concern for the region. These are folks that work in all sorts of jobs and contribute to the economy in different ways. It’s important that we have an affordable rental stock for them to live in.”
In his job as supportive services director at the Lawyers’ Committee for Better Housing, John Paul Beals has no shortage of tenants he’s worked with who continue to encounter difficulties in their quest for affordable, safe rental units.
“Things are getting worse and worse for folks,” Beals said. “I’m hearing more bad stories, not less. They get into these cycles where they just can’t get out of it, and unemployment is just huge right now.”
Veeda Pryor, a college graduate, substitute teacher and mother of two teens in Chicago’s South Shore neighborhood, is trapped in that cycle. She is searching for what would be the fifth apartment she and her family have lived in since 2009. She’s encountered a landlord in foreclosure that forced her to move. For a time she lived in an apartment with a monthly rent of $550, all she could afford at the time, and had to resort to using the oven for heat because the space heater supplied by the landlord short-circuited the apartment’s lights.
Since March, she’s been paying $650 a month for another South Shore apartment that has mold growing in the closets and up her son’s bedroom walls. The rent was $700 but the landlord reduced it after the apartment was burglarized. Now she’s looking again but is worried whether she can afford the rent that will come with a better apartment in a better area. And she’s tired of landlords who are in foreclosure or others who aren’t but don’t feel the need to maintain their units. “They know you don’t have any other place to go,” Pryor said.
Young renters are even more at risk because of the emerging trends. Median rents increased 14 percent in the city and 1s3 percent in Cook County’s suburbs between 2005 and 2010. But among renters younger than 25, income declined 25 percent between 2000 and 2009.”This younger group of folks, their incomes are reduced, and they’re the group most likely to be renters,” Smith said. The situation is even worse for young renters without a college degree. The October unemployment rate for high school graduates with no college degree was twice as high as for college graduates. As a result, developers and investors have targeted young professionals, and it has led to a luxury apartment building boom in cities like Chicago. Rentals have become increasingly attractive to younger adults who either don’t have a down payment for a house or don’t want to tie themselves down to homeownership at a time when home values continue to fall.
Developers and investors in the low- to median-income segment of the industry see no such opportunity, according to John “Jack” Markowski, president and CEO of Community Investment Corp. Instead, those building owners face vacancy rates that make it difficult to invest in and maintain buildings and a lack of credit to acquire and rehab units.
“Ultimately it’s all driven by employment,” said Markowski, whose agency provides financing to investors who want to purchase and renovate multifamily apartment buildings in an effort to preserve affordable housing. “The driver of the rental market is the employment of the people who live there.
“In 2008, 2009 and ’10, (Community Investment Corp.) had record years because there were hardly any banks that would do lending. Now, even in this last year, volume is off 15 percent. People are worried that they won’t make their money back.”